Here, four health club leaders detail ideas and success stories on redefining revenue and generating profits.
At Physiq Fitness, the biggest revenue driver has always been memberships. In fact, over 90% of all revenue comes from those enrollments. However, Landon Burningham, the club’s founder and CEO, said they recently made a change to membership billing that’s yielded amazing results.
“We just recently, as of April 1, switched all of our billing to bi-weekly,” said Burningham. “We still offer a 12-month commitment option or the month-to-month option, but all of our new member joins are coming in on a bi-weekly basis now. We have gone up significantly on price per member. For us, it was an easy transition. We haven’t seen any kickback with our new members at all.”
The idea for the change first came from a survey with the club’s staff which asked if they preferred paying on a weekly, bi-weekly or a monthly basis. Burningham said most preferred to do so on a bi-weekly basis as it aligns more with how people are getting paid now.
It’s this kind of reconfiguration of revenue that can lead to higher profit margins. The creativity of Physiq Fitness was on display again when Burningham said his club opened a location with a new outdoor workout area only available for certain membership tiers.
“We can see people are wanting to get more involved outside,” said Burningham. “So, we did build a new outdoor space and made it key card-access. We also started offering recovery centers with massage chairs, Theraguns, Normatec Compression offerings and more. We use this as a way to upgrade our members into a higher-tier membership. Unlimited access to that room is included in our third tier of membership.”
Burningham said the ABC Fitness software platform is pivotal in encouraging members to upgrade through the tiers of membership. The ABC Fitness app provides the flexibility of offering specific features to select tiers. For example, basic members at Physiq Fitness only have the ability to access simple features on the app, whereas those in the highest tier can create their workout programs and access the workout-on-demand platform.
Focusing on adding increasing value to different tiers is also a strategy recommended by Jon Brady, the president of Midtown Athletic Clubs.
“I would encourage people to go back and look at those margins,” said Brady. “Look at how many people you are moving up the tiers of your membership. That is a critical component of your profitability. I would encourage people not to get sucked into revenue for revenue’s sake. Really focus on the true margin you’re making on whatever you are selling.”
Dues are also the major revenue driver at Midtown Athletic Clubs, accounting for 70% of all income. Brady said while the other 30% is also important, all clubs should concentrate on their biggest stream first. One way to improve this focus is by boosting your marketing approach.
“We do all our marketing digitally, so we track everything people do online,” said Brady. “We look at where they are looking at us, how they found us and what they look at. We also track utilization at each location along with any changes in member usage. All communication is tailored based on the information we gather from our digital platforms. We use the data from their profile to reengage them if we haven’t seen them in a few weeks.”
Predominantly, Brady said they communicate with members through someone they’ve engaged with before. Messages are sent through employees they interacted with in the past instead of coming from an automated account. Midtown Athletic Clubs uses HubSpot as its CRM platform to accomplish all tracking that assists with sales, marketing and customer service.
Robert Brewster, the CEO and president of The Alaska Club, said his organization also uses HubSpot to help grow profits along with Visual Fitness Planner, SneezeIt, Local Mobile Marketing Solutions and Spawn Ideas.
Brewster said when it comes to new profit-driving strategies, his club recently put a large emphasis on further developing youth programs — such as summer camp and swim lessons — and being more optimistic about what the market will bear for those activities.
“Sales volume will be a combination of the right product, what your marketing and sales strategy is, and how effectively you work that process,” said Brewster. “Growth is not a project with a start and end date — it’s forever. In an environment where it seems like many clubs are in a race for the bottom price wise, I suggest you have confidence in the value of your product and price accordingly. Be creative and think big.”
One very successful profit center for Midtown Athletic Clubs is its tennis programming. This is in thanks to how Brady said coaches are paired with members.
“One of the keys for us has been the ability to put multiple people on the court at once with a coach,” said Brady. “We’re looking at the number of people per coach and keeping good ratios there. You want those ratios to be high. You can service more members that way and drive greater revenue per coach compared to a one-on-one system.”
Similar to tennis, Paula Neubert, the president and general manager of Club Greenwood, said they opened their first outdoor pickleball courts in August 2022 to help drive profits. Pickleball offerings are continuing to grow at Club Greenwood through lessons, leagues and programs to keep members playing.
Also increasing income is the club’s own lifeguard training/certification program. “It not only increased our aquatics revenue but also gave us a pipeline of lifeguards to hire and retain each year,” said Neubert. “We did this after COVID-19 left behind the lifeguard shortage. Be willing to try something new and take a risk. Consider previous program ideas and services that maybe didn’t work at that time. Tweak them and try again.”
This fine-tuning of current programs is evidenced by Physiq Fitness and when it first restructured the entire way the club did membership in September 2021. Burningham said that’s when they began offering the 12-month commitment.
“We eventually added the month-to-month option back in but we charge $5 more for people to be able to do that,” said Burningham. “It was an interesting phenomenon for us to see a lot of people pick between doing month-to-month and a 12-month because of course they are going to choose month-to-month. But, they are going to pay more and then attrition actually went down.”
Through the many strategies and research to improve revenue and profit at Physiq Fitness, Burningham said a new, younger generation of members is flooding in. By offering them the flexibility to choose their tier path, he explained they’ve displayed more trust in the club and are now less likely to leave.
“From there, just make sure you are listening to your team,” advised Burningham. “They’re your membership base for the most part. They’re on the front lines and truly know what members want and need. Ask your staff what they would want. Then align what they say with what best serves the business. That’s a path to success.”
